Mortgage loan standards remain the same for most incomes as for 2018. The National Institute for Budget Information (Nibud) writes this in the advisory report Financing Load Standards 2019, which the Minister of the Interior and Kingdom Relations has presented to the Lower House today. If the expected wage increase of 2.9 percent is taken into account, there will be an increase in the maximum mortgage loan for all incomes.
Affordable for everyone
The space a household has for living expenses is determined by reducing the income with the other living costs. These other expenses must also be payable after taking out a mortgage loan. By determining in this way what a household can spend on housing, a mortgage loan lender can not lend more money than is affordable for a household. This reduces the risk of financial problems due to excessive mortgage loan payments.
The differences with last year’s standards are marginal. Households that can expect a wage increase in 2019 can get a higher mortgage loan because of that higher income than in 2018. For the buyer and mortgage loan lender it remains important to look at the individual situation.
The second income again counts for 70 percent
Nibud recommends that 70% of the second income be taken into account in 2019 as well. The difference in disposable income between two and single earners has been increasing for some years and will increase further in the coming years. In 2016, Nibud therefore proposed to include the second income step-by-step. Last year that numbered 70 percent for the first time. Due to rounding off, this factor will remain the same next year. Buyers can also borrow more – as in 2018 – for very energy-efficient homes or for taking energy-saving measures.
Coalition agreement 2017 – 2021
The coalition agreement of the Rutte III government contains several measures that may affect the financial position of mortgage loan home owners. The consequences of these plans mean for (prospective) homeowners that for most incomes the financing burden percentages in 2021 are expected to be higher than in 2018.
The announced tax reduction (lower rates and higher tax credits) is higher than the expected price increase of the other expenses. As a result, in the future, if the plans are implemented, there will in principle be some more room for mortgage loan payments. Incomes of around 40,000 euros can expect the greatest increase because most of the tax relief is expected there. The mortgage loan standards for 2019 take into account measures from the Coalition Agreement that have already been taken into account.
A mortgage loan will last a long time
In determining the mortgage loan standards, Nibud takes the long term into account. The mortgage loan burden must remain portable now and in the future. Households must be able to pay the mortgage loan throughout the term, even if, for example, children are added. The financial burden tables take account of standardized spending patterns and reflect what someone should be able to pay objectively, given the income. What the mortgage loan lender should borrow as a maximum according to the tables is not always appropriate to a person’s personal preferences and corresponding spending pattern. That is why customization is always necessary for mortgage loans.
In some cases a higher mortgage loan can be provided in a responsible manner than the tables indicate. The ministerial mortgage loan Credit Scheme offers room for this. When it comes to a permanent situation, the mortgage loan lender can opt to deviate from the lending standards in individual cases, provided this is motivated and substantiated. More provision could be made, for example, if there is an unconditional rise in income in the short term or if someone can reduce his mortgage loan payments by switching.
The report was presented to the House of Representatives on 30 October 2018. You will find detailed examples for a number of households in the appendix.
The tables below show the maximum mortgage loans in 2018 and 2019 for a number of incomes. This takes into account an expected average wage increase for 2019 of 2.9 percent.
Example maximum mortgage loan 2018 – 2019 (interest = 2.75%)
* An average wage increase of 2.9% in 2019 has been taken into account
Example maximum mortgage loan 2018-2019 for three two-income households (interest = 2.75%)
An average wage increase of 2.9% in 2019 has been taken into account
Backgrounds to the report
With the Financing Load Standards Report 2019, Nibud advises the Dutch government on the financing burden standards for mortgage loan financing for 2019. These standards form part of the mortgage loan Credit Scheme. For the preparation of this advisory report, Nibud consults several parties involved in the mortgage loan market, including the Netherlands Authority for the Financial Markets, De Nederlandsche Bank, the Dutch Banking Association, the Dutch Association of Insurers, the Association of Private Owners and the Stichting Waarborgfonds Eigen Woningen. .